The company behind the extremely popular app TikTok, ByteDance is reportedly working on making a smartphone of its own, according to the Financial Times. The smartphone will come preloaded with some of ByteDance’s most popular mobile apps like the ubiquitous TikTok, news aggregator Jinri Toutiao, and also a music streaming app. According to two unnamed sources in the report, ByteDance CEO Zhang Yiming has “long dreamt” of making a smartphone awash with preloaded applications.
Interestingly, it was only earlier this year that ByteDance secured a deal with Chinese smartphone manufacturers Smartisan which included acquiring some patents and hiring a few Smartisan employees. At the time of signing the deal, ByteDance said that it was done because the company wanted to “explore the education business”. However now, ByteDance’s smartphone patent acquisitions suddenly make more sense and give a better perspective on the deal.
Nikhil adds: social apps have wanted to do smartphones before: Facebook was once going to launch a Facebook phone, but never did. The thing to remember here is that every platform with over a billion users will want greater independence from the competitors it is dependent on: for example, Bytedance would be dependent on both other handset OEMs for preloading and on Google Play store for distribution. Launching its own handset, though, can’t be about distribution alone.
Will India be a key market for the smartphone?
While the Financial Times report doesn’t mention the markets that the smartphone will be targeted at, it can be predicted that its prospects could be hampered in the US given the country’s trade war with China. As a result, ByteDance will have to take a close look at its biggest stronghold – India. The firm’s short video streaming app, TikTok has become a household name in the Indian subcontinent with figures suggesting that ByteDance has around 300 million monthly active users in India across its suite of three products — TikTok, Vigo Video and Helo. Despite the 20 day ban on TikTok for spreading “cultural degradation” in India, ByteDance has already invested $100 million in India and plans to invest $1 billion more in the coming years.
When you club those numbers with a recent finding by Cisco, which claims that come 2022, India will have 829 million smartphone users, it won’t be difficult to assume that ByteDance would be aiming at a share of that pie. However, it will have its work cut out. The smartphone market in India is already populated with firms like Apple, Samsung, Vivo, Oppo, OnePlus, and Xiaomi among others. Whether or not ByteDance would be able to meet the supply chain, and product design capabilities of these companies will remain crucial to the success of its smartphone, especially in the Indian market.
Is it a good time to be entering the smartphone business?
Apart from the challenges in India, ByteDance, being a Chinese firm, is likely to face turbulence in the US market. That leaves only China as the single biggest market for marketing its smartphone. Apart from that, the competition that ByteDance will face once its enters into the smartphone building fray will be immense. It will have to take on firms that have pioneered the art of making smartphones, which – even for a firm of ByteDance capability – is a big ask.
There are also some examples from the past that the firm should look at. ByteDance is not the first social media company looking to expand into the smartphone business. Before this Facebook had launched their own phones in conjunction with smartphone heavyweights, HTC. Dubbed the Facebook phone, only 15,000 examples were sold in the entire world and the California based company pulled the plug on the project. Similarly, Snapchat was dabbling with the idea of building its smartphone in 2017, during the peak of its popularity but later dropped it. If these examples are anything to go, ByteDance and the TikTok phone already have its work cut out.